Dow Plunges 531 Points in Global Selloff A global market rout intensified Friday, pummeling stocks and commodities, as concerns about China's economy pushed the Dow industrials into correction territory. Both the blue-chip index and the S&P 500 posted their biggest one-day percentage drops since November 2011, with the Dow closing 10% below its recent high. U.S. oil prices also briefly dropped below $40 a barrel on Friday, a level not seen since the financial crisis. The Dow Jones Industrial Average declined 531 points, or 3.1%, to 16460. The S&P 500 dropped about 3.2% to 1971. The Nasdaq Composite shed 3.5% to 4706.See More Coverage »

"The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the 'ingredients' for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that 'this time is different.' Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst, they will burn extremely hot.Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time."

But... but... pension funds are "allowed" to buy stocks. Judging by the first few minutes of trading in the first thing to open this evening on the mainland, the CSI 300 Index Futures which immediately tumbled by 4% to 3340, China's attempt to deflect attention from the fact that it did not do a 50-100 bps RRR cut is not doing too well.

U.S. Stocks Pare Losses After Early Plunge U.S. stocks pared some of Monday's steep losses after a rocky morning during which the Dow Jones Industrial Average briefly plummeted more than 1000 points. The blue-chip benchmark dropped as much as 1089 points before partly recovering as traders said mutual funds and other investors began stepping in to buy up beaten down stocks. It was recently down 207 points, or 1.3%, to 16253.See More Coverage »